At Lazard, Compensation Is a Work in Progress

On Wall Street, one of the closest watched metrics is the “compensation ratio,” or the percentage of revenue that banks and brokerages dole out as employee pay and benefits.

When Lazard went public in 2005, it committed to a compensation ratio that was high relative to bigger investment banks such as Goldman Sachs Group and Morgan Stanley (roughly 45% and 50%, respectively), but still well below Lazard’s roughly 74% compensation ratio in 2004, when it was a closely held firm:

“[O]ur policy will be to set our total compensation and benefits expense, including amounts payable to our managing directors, at a level not to exceed 57.5% of our operating revenue, such that after considering other operating costs we may realize our operating profit margin goals,” Lazard said in its 2005 IPO filings.

In each of the past three years, including for 2010, Lazard has exceeded its target ratio….